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New York National Union Fire Ins. Co. of Pittsburgh, Pa. v. Ambassador Group, Inc., 691 F.
Supp. 618 (E.D. N.Y. 1988). The court, in dicta, explained that in a statutory
interpleader action to resolve multiple claims asserted against the officers and
directors of an insolvent insurer, New York's Superintendent of Insurance, an
indispensable party, was properly joined in the action even though an Order of
Liquidation had been issued prohibiting all persons from initiating any action
against the insolvent insurer or the Superintendent.
Pennsylvania Crozer‐Chester Medical Ctr. v. Gerald J. Sullivan & Assocs., Inc., No. 86‐4890,
1989 U.S. Dist. LEXIS 13577 (E.D. Pa. Nov. 14, 1989). Insured and its
comprehensive liability insurance carrier and liquidator of insolvent directors,
officers and trustees insurance carrier filed cross‐motions for summary
judgment to recover interpleaded settlement funds paid to the court by
underwriter of directors, officers and trustees coverage. The court determined
that New York law controlled the dispute and that the relationship between
the insolvent directors, officers and trustees insurance carrier and the
underwriter was one of reinsurance. The court then pointed out that "[i]t is
well established by both statute and case law that the proceeds of reinsurance
policies are paid to the liquidation estate following the insolvency of a ceding
company." Accordingly, since the insured and its comprehensive liability
insurance carrier offered no proof that the settlement agreement was a
novation intended to supersede the original reinsurance arrangement, the
court concluded the liquidator was entitled to the interpleaded settlement
proceeds. The court granted the liquidator's motion for summary judgment.
Puerto Rico
Karon Bus. Forms, Inc. v. Skandia Ins. Co. Ltd., 80 F.R.D. 501 (D. Puerto Rico
1978). Karon Business Forms, Inc. was insured under a fire insurance policy
issued by Commonwealth Insurance Company. Commonwealth was in the
midst of liquidation proceedings at the time. That policy had been endorsed by
Skandia Insurance Co., Ltd. as guarantor, conditioned on Commonwealth
obtaining an agreement that any payments made pursuant to the
endorsement be proportioned among the reinsurers, including Skandia. That
condition was never fulfilled. Karon made a claim against Commonwealth
under the policy. When Commonwealth could not pay, Karon turned to
Skandia as guarantor. Skandia sought to implead Commonwealth's reinsurers
in order to require them to pay their respective shares of Karon's claim. The
Court held that even though Commonwealth, if solvent, would have been able
to claim reinsurance proceeds from the co‐reinsurers, Skandia's claim (based
on breach of a condition precedent) was too tenuous to justify an impleader
against the reinsurers, since Commonwealth's possible liability to Skandia is
entirely distinct from the reinsurer's liability to Commonwealth. By paying
Karon, Skandia stepped into the insured's shoes as a creditor of
Commonwealth, not into Commonwealth's shoes as a creditor of the
reinsurers. Skandia was allowed to implead and to seek recovery from the
Receiver of Commonwealth.
Court Orders of Rehabilitation or Liquidation ‐ In General
Third Circuit General Glass Industries Corp. v. Monsour Medical Foundation, 973 F.2d 197
(3rd Cir 1992). Plaintiff, on behalf of its 300 workers, brought RICO, ERISA and
Commonwealth tort claims against the Company's employee health insurer in
liquidation (Keystone Medical Services and its successor, Monsour Medical
Foundation). The Third Circuit vacated so much of the District Court's order
dismissing plaintiff's claims that were broader than, or different from, those
asserted by the Pennsylvania Commissioner of Insurance in the